While many welcomed the New Year with celebrations, Huawei ended 2021 with a sobering statistic: the Chinese-based technology company’s revenue was down 30 percent this year because of sanctions imposed in 2021 by the Trump administration. The drop comes as the Biden administration remains wary of Huawei’s international presence, concerned that the Chinese government may be affiliated with Huawei in some way. For much of 2021, the United States warned its allies of the Huawei controversy and tried to convince other countries to cut off their connections with the company. In response, Huawei refuted US claims that its systems are insecure and accused the U.S. of attacking them for political expediency. That response did little, however, to curb the trajectory of its middling revenue for the 2021 fiscal year.
Huawei is one of the largest Chinese-based global telecommunication companies. However, unlike most of its domestic counterparts, Huawei has a large international presence in Europe, Asia, and Africa. This cosmopolitan presence has thrust it into the international limelight—and also placed it under fire. Increasing its international vulnerability is that Huawei is privately owned, meaning that it is not traded publicly; U.S. traders have no share in the company. As such, any U.S. sanctions levied against the company would only hurt interests outside of the U.S.—hence the U.S. government’s decision to do just that.
Although Huawei is a telecommunications company, it’s known for its various consumer products and sleek designs. This component of the company has suffered most in the last year, down by a striking 47 percent. Indeed, the Trump administration sanctions had rescinded Huawei’s permission to use the Google Android operating system, leaving a company whose consumer electronics relied heavily on Android software to scramble for a replacement. Amidst the shifts, the company even had to sell a portion of its smartphone business to compensate for the losses.
Beyond Android restrictions, the U.S. also implemented export controls in 2021, which made it difficult for Huawei to receive technology and hardware to manufacture its products. Many technology companies now need “export licenses” to import U.S. products, and the U.S. would certainly turn a blind eye to any Huawei requests. As a result of these changes, Huawei has shifted to their own operating system, known as Harmony OS. As its consumer electronics business scrambles to recover, Huawei has focused its efforts on generating revenue through cloud services and producing electric car parts. Despite such adjustments, Huawei Corporation nonetheless saw a $48.21 billion drop in its 2021 revenue compared to 2020.
The global pandemic has also contributed to the Huawei revenue downfall by decreasing consumerism in China, cutting Huawei’s sales short; BBC also notes that chip shortages have created challenges for the company. These obstacles will continue in 2022, but the company has begun exploring solutions. As stated by the Financial Times, Guo Ping, the rotating Chairman of Huawei, says “2022 will come with its fair share of challenges, but we will keep working closely with our global partners to overcome the difficulties we face, improve business performance and strengthen our foundations.” Huawei will continue to focus on its international business. The company plans to utilize its global support network in order to regain what has been lost and overcome its challenges.
As such, 2022 will see a battered Huawei seek to get back on its feet. Only time will tell whether the tech giant is successful.
By: Arjun Shah